Economic growth, poverty and the dynamics of income inequality: A comparative analysis on different income groups countries

Today's world is witnessing an increase in inequality along with globalization and rising prosperity. The economic growth experienced by the some recently low-income countries with the opportunities of globalization has deepened the inequality between them and the low-income countries. The main reason for this situation is the recent economic growth of China and India that changed the lives of billions of people. Although there has been a decrease in global poverty since 1980, only the fastest growing countries have closed the gap with the rich countries and the difference has widened with other countries. Today, global inequality and poverty are largely the result of the unequal sharing of economic growth between regions and countries. The increase in income inequality creates an obstacle to economic development as it reduces the share of the poor in economic growth. In this context, poverty and income inequality are considered as important issues to be examined in the economic growth process. Because, economic growth is not sufficient to reduce poverty, and it is possible to achieve effective and stable results with the implementation of policies to reduce income inequality. In this context, first of all, the extent and direction of global income distribution inequality for the years 1995-2017 were analyzed using the nonparametric conditional density estimation method. As a result of the analysis, it was concluded that there was no decrease in inequality among countries and that the distribution of income is concentrated in two groups between countries with more even distribution and countries with an unfair distribution of income. According to the empirical findings, it is concluded that there is no decrease in inequality between countries. In addition, it is concluded that there is a divergence between countries with equal distribution of income and countries with unfair distribution of income. This result indicates that the difference between the high income group and the low income group has widened. Additionally, countries are divided into different income groups according to the World Bank classification, and it is aimed to empirically analyse and compare the relationship between economic growth, income inequality and poverty.Analysis were performed by using cross-section data estimation method using data from 93 countries for the years 1995-2017. According to the empirical findings, income inequality and economic growth have important effects on poverty. However, the relationship between economic growth and income inequality varies among different country groups. Empirical findings have been obtained showing that the effect of economic growth on poverty depends on the income distribution equality, and recommendations are presented in the conclusion section based on these findings. Keywords: Income distribution inequality, economic growth, poverty, nonparametric conditional density estimation, cross section data analysis